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Grolier, Inc. v. Fed. Trade Com. - 615 F.2d 1215 (9th Cir. 1980)

Rule:

The Administrative Procedure Act, 5 U.S.C.S. § 554(d)(1), expressly forbids Administrative Law Judges from acquiring ex parte information.

Facts:

An Administrative Law Judge (ALJ) working for respondent Federal Trade Commission (FTC) ordered petitioner corporations to cease and desist from violating antitrust laws under 15 U.S.C.S. § 45. The ALJ had been an attorney-advisor to a former FTC commissioner who investigated petitioners. Petitioners requested that the ALJ disqualify himself, but he refused, stating he did not remember working on matters involving petitioners. Petitioners then moved to set aside the order, claiming the ALJ's failure to disqualify himself violated the ex parte provisions of the Administrative Procedure Act, 5 U.S.C.S. § 554(d), the prohibition against agency employees investigating and adjudicating factually related cases. The FTC denied the motion, claiming ALJ did not perform investigations as attorney-advisor. Petitioners challenged the FTC’s decision.

Issue:

Under the ex parte provisions of the Administrative Procedure Act, was the ALJ who issued the cease and desist order disqualified from doing so?

Answer:

Yes.

Conclusion:

The appellate court reversed and remanded FTC’s decision, holding that the ex parte provisions of the Administrative Procedure Act, 5 U.S.C.S. § 554(d) prohibited anyone connected with ex parte information from adjudicating factually related cases. The United States Court of Appeals for the Ninth Circuit also reversed and remanded the denial of petitioners' discovery request because it was based on FTC's incorrect conclusion that attorney-advisors did not perform investigations.

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